After AskMe Breakup, Two Other Astro-Funded Firms In Troubled Waters

Malaysia-based media group Astro Media Services’ investment misfortunes in India are far from over.

The first sign of trouble was when e-commerce company AskMe suspended operations after Astro pulled the plug on further investments in the company. That seems to have triggered a domino effect.

Trouble Comes In Twos?

Soon thereafter, two other Astro-backed companies – digital entertainment services provider Famebox Network Ltd., that ran #fame, and American Swan Lifestyle Pvt Ltd., that owned lifestyle company American Swan – also suspended operations following a fund crunch, said four people familiar with the development, including two former employees of #fame.

While #fame’s website and app carry an under-maintenance message, the American Swan website says it’s not accepting any new orders.

The day AskMe and Astro announced their ‘break-up’, #fame’s management said their company was going through a ‘rough phase’ and would not be able to pay salaries for the next month, one of the former #fame employees quoted above told BloombergQuint.

All 110 employees in both companies have since lost their jobs, the employee added. #fame employed around 70 people while American Swan had 40 employees at the time they decided to wind down.

TTN Ventures Insolvent?

Astro funded #fame and American Swan via their parent company To The New (TTN) Ventures, in which it owns a majority stake. An Astro spokesperson said the company had so far invested $60 million in TTN Ventures.

Of that $60 million #fame received $10 million as part of a series A round of funding last year. Prior to that, it had raised $3 million from TTN Ventures.

American Swan started operations in 2013 with $6 million in funding from TTN Ventures, according to a story reported by VCCircle. The story added that in May 2016, TTN Ventures was scouting for a strategic partner for American Swan.

Besides these two, TTN Ventures has three other businesses:

1. TTN Digital (a consolidation of four of its existing businesses – digital marketing services firm Ignitee Digital, content management firm Tangerine Digital, digital marketing agency in Singapore and China Techsailor, and web and mobile app developer IntelliGrape Software)
2. ThoughtBuzz
3. Blogmint

In response to BloombergQuint’s email queries, the Astro spokesperson said fresh investments in TTN Ventures are being discontinued due to the underperformance of existing investments.

But that’s only the start of TTN Ventures’ troubles. The Astro spokesperson told BloombergQuint that TTN Ventures is now insolvent and a Singapore court has approved the winding-up of the company. “A liquidator has been assigned to initiate the process,” he added.

The Sanjiv Gupta Connection

To understand how the AskMe episode trigerred the demise of TTN Ventures, it is important to unravel the common web linking AskMe, #fame, American Swan, and TTN Ventures, apart from the fact that they all have Astro’s backing.

At one time Sanjiv Gupta was the executive chairman and managing director of AskMe.

Gupta, along with Puneet Johar - a former executive with Star Group, also co-founded TTN Ventures and the two were also minority stakeholders in the venture. The TTN Ventures website (which is no longer functional) listed Sanjiv Gupta as the co-founder and chairman of TTN Ventures, as also one of the company directors.

When Astro parted ways with AskMe, it pulled the plug on investments in all ventures that involved Gupta.

Sanjiv Gupta had initiated management buyout offers for both AskMe and TTN Ventures within a month of each other, the spokesperson added.

What About Other TTNV Investments?

TTN Ventures’ other subsidiaries have also taken a hit due to these sudden changes. Tangerine has laid off about 30 percent of its staff in order to cut costs, said a Tangerine employee on the condition of anonymity. The company did not reply to an email query from BloombergQuint seeking comment.

None of the companies were bad investments on the part of Astro, all four people cited at the start of this report said. In fact, #fame was on a growth trajectory but it needed capital, and when Astro froze funding, the company was suddenly faced with a crunch, they added.

Terming it as a case of ‘a relationship gone sour’ between the promoters and the shareholders, they added that the other companies have survived so far because they are pure service businesses and therefore more stable.

Separate email queries send to Puneet Johar, Sanjiv Gupta and TTN Digital, did not elicit any response till the time of filling this report. Gupta could also not be reached on his phone.

Are All Astro Investments Ill-Fated?

Over the last 10 years, the Astro Group had invested an estimated $700 million across 10 entities in the internet and the digital media space in India, another person privy to the development said on the condition of anonymity. This excludes an investment in Aircel, which is now being merged with Reliance Communications, he added.

According to various media reports, Astro had infused about $300 million in AskMe, nearly $166 million in Sun Direct, $40 million in NDTV Lifestyle, $60 million in TTN Ventures and holds a minority stake in Red FM. Astro however, refused to verify this investment data.

The group has already exited some of its smaller investments. It exited from Turmeric Vision, the company behind the food and lifestyle channel Food Food in June, after selling its stake to broadcaster Discovery Communications. Turmeric Vision was a joint venture between celebrity chef Sanjeev Kapoor, Astro Overseas Ltd and Mogae Consultants, a marketing communications network by Dentsu India’s former chairman Sandeep Goyal.

The VCCircle report quoted above also said that Astro was looking for a strategic exit from India. The Malaysian group however, refuted that claim. The Astro spokesperson said the group would remain invested in all performing investments in India until the time is ripe for an exit.